Congressman Capuano Files Legislation Restricting Access to DMF Data

Tax
related identity theft is on the rise as highlighted in a 2011 annual
report by the Taxpayer Advocate Service (TAS) (advocacy voice at the IRS). The Social Security
Administration (SAA) maintains a Death Master File (DMF) which provides
key data on decedents including personally identifying information such
as Social Security number and address. DMF data is used by insurance
companies, medical researchers and genealogical researchers.

The Taxpayer Advocate Service (TAS) has recommended that DMF data be
restricted to reduce crime. Congressman Michael Capuano has filed legislation
that will fully restrict Social Security number access from the DMF
database to the general public including access by genealogical
researchers.

While Congressman Capuano's legislative effort may be well intended,
the result may harm the work of genealogists especially if the Social
Security numbers are made permanently unavailable.

Death Master File (DMF) Created

On July 4, 1967, Congress recognized the importance of citizen access
to government information to know "what the government is up to" and
put the Freedom of Information Act (FOIA) in place. FOIA provides that
a person has a right, enforceable in court, to obtain access to federal
agency records

In 1980, United States District Court for the District of Columbia
found in favor of the plaintiff and entered a consent judgment in a
FOIA lawsuit that required the SSA to disclose the SSN, surname, and
date of death (if available) of deceased Social Security beneficiaries
once a year.

Subsequently, the SSA decided to create the “Death Master File” (DMF),
which contains decedent information including the full name, SSN, date
of birth, date of death, and the county, state, and ZIP code of the
last address on record, and to provide it on a weekly basis.

DMF data are particularly critical for insurance companies and estate
proceedings. They are also helpful to individuals doing
genealogical research. As a result, several websites (including
genealogy sites) published DMF information either free or for a nominal
fee.

For the average honest person, that DMF data are available to the
public via the Internet does not generate schemes on how to steal.
After all, once a person is registered to the Death Master File, their
Social Security number is no longer usable. Or so you would think.

Tax-Related Identity Theft

Identity theft is the fraudulent acquisition and use of a person's
private identifying information, usually for financial gain.
Tax-related identity thefts are one of the newest categories and they
are on the rise. According to the Taxpayer Advocate Service, in
fiscal year 2011, they received over 34,000 identity theft cases, a 97%
increase over the prior fiscal year.

Credit card number theft is a form of identity theft because the
perpetrator represents him/herself as YOU for financial gain. Decdes
back, credit card number theft was generally only possible when the
credit card itself was stolen. However, such theft is now
commonplace due to the availability of large databases of credit card
numbers (after successful hacking).

Tax-related identity theft impacts specific individuals and the IRS
directly but because taxpayer funds are improperly distributed to the
perpetrators, all US citizens have to consider themselves stolen from
as well.

One form of tax-related identity theft can occur if the thief has
access to just enough identifying information about a decedent to allow
claim to the decedent as a dependent for tax-related gain. So
once again, it is the readily available access to critical identifying
information via public access on the internet that is giving rise to
these new forms of identity theft.

Ironically, the Social Security Administration (SSA), sister organization to the victimized IRS, is contributing to the problem.

A relatively new tactic for some identity thieves is to file tax
returns claiming the dependency exemption, and various other tax
credits for deceased individuals who have no real relationship to the
tax filer.

As a result, the Social Security Administration's Death Master file
(DMF) has become a Pandora's box opening riches for thieves and
countless problems for victims and the federal government (IRS).

Sample identity Theft Scenario

In their 2011 annual report to Congress, the Taxpayer Advocate Service described an example scenario.

Zoe, who is a member of an organized crime network, has just learned
that filing falsified tax returns is a lucrative endeavor. She even
pays $200 to attend a seminar put on by one of her associates on how to
obtain personally identifiable information and what to do with it.

As instructed, Zoe visits a genealogy website that makes DMF data
available at no cost. By the end of the day, Zoe obtains the names,
Social Security numbers, and the addresses of dozens of deceased
individuals. From a tax return perspective, children's names provide
the most lucrative financial return.

Imagine, says the Taxpayer Advocate Service, a scenario where grieving
parents of a child named Chloe who passed away in 2010 are unable to
file a tax return on time in 2011 (they file an extension).
By the time they file their return in August of 2011, Zoe has already
been claimed as a dependent for the 2010 tax year by the person
committing the identity theft. The parents of Chloe spend the rest of
2011 corresponding with the IRS to prove that Chloe is their daughter.

TAS Recommendation: Restrict Access to the DMF

In their 2011 report, the taxpayer Advocate service recommends that
Congress enact legislation to restrict access to certain personally
identifiable data in the DMF. The TAS concludes in their report,
three reasons why there needs to be a change.

The DMF database does not reveal much about "what the government is up to"

The nature of the data provides a real threat that identity thieves will misuse the information

The victims families may suffer emotional and financial harm as a result

"The national taxpayer Advocate is appalled that the federal government
is making sensitive personal information so readily available to those
who steal the identities of deceased individuals add to the burden and
heartbreak, facing their survivors. Perhaps most worrisome, the DMS
contributes to tax related identity theft by providing the date of
birth and Social Security number, allowing thieves to target decedents
who were minors, and can be claimed as dependents."

The freedom of information act (FOIA) provides access to federal agency
records while providing certain exemptions. The DMF exists as
public-friendly response to a District of Columbia court ruling.
Critical agencies need to DMF data all the public, in particular
genealogical researchers, find DMF data very useful. At the same time
identity thieves are using the data to steal. The challenge is how to
balance these conflicting interests - protecting the groups that need
DMF data or who find it useful while keeping personally identifiable
data away from thieves.

However in 1989, the Supreme Court clarified that the purpose of
FOIA is to enable citizens to find out "what their government is up
to." And for this purpose "is not fostered by disclosure of information
about private citizens that is accumulated in various government files
but that reveals little or nothing about agency's own conduct."

While the 1980 consent judgment helped generate the DMF database, the
nature of this data does not reflect on the performance of the Social
Security Administration. In other words, DMF data does not necessarily
fall under FOIA. It does not reveal anything about "what the SSA is up
to."

On the other side of the argument is the issue of privacy. Certainly
the death of the subject diminishes that individual's privacy interest
to some extent. Yet courts have held that it does not extinguish that
interest. In 2004, the Supreme Court fully recognized that
surviving family members also enjoy a privacy interest that must be
considered when analyzing the release of agency records.

Recent Changes in DMF Data Availability

With greater awareness about the increased occurrence of tax related
fraud, several genealogy websites have voluntarily agreed to curtail
the availability of the Death Master File information including
Ancestry.com. But that is not enough. The national taxpayer Advocate
has requested that Congress enact legislation to restrict access to the
DMF to those with a legitimate need for such sensitive information.

Congressional Approaches to Restricting Access to the DMF.

1. Restrict who can access the DMF
2. Establish a general rule, the tax return
information will be kept confidential and would therefore provide DMF
information to entities with a demonstrated fraud prevention purpose
and imposing significant penalties for authorize redisclosure's.
3. At that all or substantially all DMF information
public after a specified number of years for genealogical research
4. Mandate a truncated version of the SSN to be included in the DMF

Congressman Capuano Files Legislation

(excerpted from his Feb 1, 2013 E-Update)

I am filing legislation to prohibit the Social Security numbers of
deceased individuals from being made publicly available through the
Federal government’s Death Master File (DMF). The Social Security
Administration publishes the DMF, which includes the full name, social
security number, date of birth, county, state, and zip code of deceased
individuals. It is updated regularly. For fees as small as $10, anyone
can access the database. In a 2011 report to Congress, the IRS Taxpayer
Advocate pointed out that easy access to the DMF is a major contributor
to recent increases in tax related identity theft.

There is really no reason why the Social Security number of someone who
has passed away should be available to anyone for a few dollars. The
IRS has identified this as a problem and Congress should act quickly to
close this loophole.

The DMF is maintained and made publicly available for several reasons.

Government agencies such as the Centers for Medicare
and Medicaid Studies use it to determine if they should stop paying out
benefits.

Medical researchers use it to track deaths and the spread of disease.

Life insurance companies use it to help detect fraud.

My legislation would not prohibit administrators from maintaining the
DMF. It would simply make the Social Security numbers of deceased
individuals unavailable to the public. This is a commonsense step that
would help reduce identity fraud, address a problem that the IRS has
already identified and save money.

Genealogical Research Deprived

Congressman Capuano's proposal is important and timely. It addresses a
serious tax related identity theft problem but it leaves millions of
genealogical researchers without the ability to track historical data
where a connecting factor may be the Social Security number.

There needs to be a balance that takes into account the needs of
simple, humble and ordinary people who are honest and whose only
objectives are to research their past.